Yesterday, Sierra Wireless reported its Q1, 2017 results. The company lost (All figures in USD) $211,000 on revenue of $161.7-million, a topline that was up 13.3 per cent over the same period last year.
“In the first quarter of 2017, we delivered solid year-over-year revenue growth and profitability results that exceeded our expectations,” said CEO Jason Cohenour. “We continued to strengthen our position as a leader in device-to-cloud solutions for the Internet of things with new customer wins, new product offerings and the acquisition of the assets of GlobalTop Technology’s GNSS business.”
Tse says despite a strong recent run, investors should have no qualms about diving into Sierra Wireless today.
“Sierra Wireless’s Q1 results and Q2 outlook were well ahead of both our and consensus’s estimates,” notes the analyst. “Strong customer demand drove y/y revenue growth across all business segments and geographic regions. All in, Sierra’s strong Q1 results boosted our confidence as it relates to the Company’s ability to secure new design wins and convert such wins into revenue. Combined with management’s recent discipline to cost control, which was especially evident in Q1, we think that paves the way for even more upside in the stock. As laid out in our Feb. 9th upgrade, in our long history in following this name, we can say with confidence SW / SWIR has outsized relative returns when it exceeds expectations; Q1 and guidance was way ahead of expectations which means this has a lot more legs, so let it ride.”
In a research update to clients today, Tse maintained his “Outperform” rating, but raised his one-year price target on Sierra Wireless from (U.S.) $25.00 to $32.00, implying a return of 29 per cent at the time of publication.
Tse thinks Sierra Wireless will post EBITDA of $50.3-million on revenue of $684.8-million in fiscal 2017. He expects these numbers will improve to EBITDA of $58.7-million on a topline of $773.3-million the following year.
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